The Philippines’ gaming market leader, Bloomberry Resorts, has experienced a forecast cut by Maybank Investment Bank due to a gaming revenue slowdown.
According to an investment memo, Maybank analyst Alexa Mae Carvajal, notes that Bloomberry’s 1Q-3Q performance is just 67 percent of Maybank’s FY23 estimate for the company. This was due to lower-than-expected gross gaming revenue (GGR) from the VIP (due to the drop in casual junkets) and slot segments.
The operator of Solaire Resort, Bloomberry Resorts, reported 3Q23 net income of PHP1.9 billion ($34 million) and PHP8.3 billion ($148 million) for 1Q-3Q.
In this context, Maybank cuts its FY23/24 earnings forecast by 13 percent and 23 percent, respectively, to PHP10.8 billion ($193 million) and PHP13.2 billion ($236 million). ‘Still, this translates to a 109 percent and 23 percent year-over-year growth.’
The slots segment mainly drove Bloomberry’s GGR growth in 2023. Revenues in 3Q23/9M23 grew 7 percent and 32 percent, respectively, to PHP10.7 billion ($191 million) and PHP36.1 billion ($646 million).
This was driven by 35 percent yearly GGR growth in the slots segment and 28 percent and 14 percent year-on-year growth in VIP and mass. Carvajal points out that the VIP and slot segments came in lower than expected, at 70 percent and 60 percent of its FY23 forecasts, such that Maybank lowered FY23/24 revenue estimates by 7 percent and 12 percent to PHP47.8 billion ($855 million) and PHP57.4 billion ($1 billion).
Continued growth driven by Solaire North opening
Regarding future growth, Maybank expects that growth is going to be sustained by the further recovery in the higher-margin mass and slots segments and the opening of Solaire Resort North, which will add 150 tables for mass and 2,500 for slots by 1H24.
Enrique K. Razon Jr., Bloomberry Chairman and CEO, said in the 3Q23 results announcement, “With the opening of our second property next year, we aim to capitalize on this domestic strength. At this time, the construction of Solaire Resort North is on schedule to be completed by March 2024. We anticipate that Solaire Resort North will strengthen our market leadership position in the Philippines and raise the regional competitiveness of the Philippine gaming industry to new heights.”
Meanwhile, regarding tourism in the country FY23 foreign tourist arrivals rose 105 percent year-over-year to 5.5 million but are still only at 66 percent of pre-pandemic levels.
‘The further recovery in the tourism sector could potentially drive the increase in demand for the VIP segment. Currently, foreign players are mainly from South Korea, Taiwan, Singapore, and Malaysia, and any uptick from Chinese tourist arrivals would be a potential windfall for Bloomberry,’ notes the analyst.
